Banks ready Brexit changes, but tell staff no panic

By Steve Slater

LONDON, March 29 (IFR) - Major banks said they won't be rushing their decisions on footprint changes due to Britain's exit from the European Union, but said some staff will inevitably have to move and some institutions are looking at buying property in other cities.

Britain invoked Article 50 of the Lisbon Treaty on Wednesday, which started the two-year process of the country's divorce from the EU. The move did not trigger a rush for banks to reveal their plans, but some updated staff on what was happening.

"This is a complex process and we will not rush into any decisions," two of JP Morgan's most senior executives told staff in a memo seen by IFR.

"We have spent the last several months reviewing the many variables in this process - client needs, employee considerations, regulatory requirements, operational risks, our inventory of licences, political issues in the region and dozens of other factors," said the memo from Daniel Pinto, head of JP Morgan (Other OTC: MGHL - news) 's corporate and investment bank, and Mary Erdoes, head of asset and wealth management.

JP Morgan warned before the Brexit vote it could move 4,000 of its 16,000 staff, potentially affecting staff in London and Bournemouth in the south of the country.

"While our objective in the short term is to limit the number of staff moves, there will inevitably be some staff who will be asked to consider relocation," the US bank said in Wednesday's memo.

The memo said it had options across the EU in terms of where to move operations and legal entity structure even if Britain loses its ability to passport financial services into the EU.

It will use its existing legal entity structure in the short term so it can immediately do business when Brexit occurs, and said it will continue to make adjustments as the two-year negotiation period proceeds.

Goldman Sachs (NYSE: GS-PB - news) , another US bank with major European headquarters in London, told staff there would be a "considerable period of time" before the terms of Brexit become clear. "Only when these negotiations are complete will we be able to make long-term decisions with respect to our footprint," Goldman's European CEO Richard Gnodde told staff ahead of Article 50 being triggered.

Gnodde said the bank had been working to prepare for the range of outcomes and will need to take actions in the coming months to keep its options open.

"We have a tightly defined team implementing these contingency plans which will involve upgrading various European locations, including acquiring additional real estate, securing access to market infrastructure and applying for additional licences to conduct business," Gnodde said.

Gnodde said last week the first phase of those contingency plans was likely to involve "hundreds of people" rather than many more than that.

HSBC, Europe's biggest bank, told staff up to 1,000 London-based jobs that support activity in continental Europe may need to move, repeating previous guidance. It has said most of those will move to Paris, and will still leave the bank with 45,000 staff in the UK.

It said it wanted "to ensure our colleagues working outside their home countries have certainty of residency as soon as possible" in the message to staff on Wednesday, seen by IFR.

It added: "We are confident that HSBC's strong position and subsidiary model in Europe will enable us to easily flex to serve our clients' interests."

About two-thirds of major financial firms with operations in Britain are yet to make any public statement about their plans for Brexit, however, according to a study.

Consulting and advisory firm EY said 153 out of the biggest 222 firms with operations in Britain had not said anything about the impact Brexit could have on their domicile, operations or staff location.

EY said 53 of the 222 firms are actively moving some staff or part of their operations out of the UK, or are reviewing their domicile as a result of Brexit. (Reporting by Steve Slater; Editing by Ian Edmondson)